CBA recommends adhering to conservative approach in managing liquid risks
Azerbaijan, Baku, June 7 / Trend N. Ismayilova /
The share of external funding and inter-bank transactions increased in the first quarter of 2010 in the formation of the resource base of Azerbaijani banks. But deposits preserved the role of the main source, the CBA report on financial stability said.
The total deposit base of banks has increased by 29 million manat and reached 4.6834 billion manat compared to early 2010. The share of deposits in the total liabilities amounted to 47 percent. There was volatility in the dynamics of deposits of legal entities in the first two months of the quarter. Their volume decreased by 1.3 percent during the quarter and hit $ 2.2884 million manat. In annual terms, corporate deposits increased by 28.5 percent, and amounted to a total volume of bank deposits - 22.8 percent.
During the reporting period, deposits increased by 2.6 percent and reached 2.395 million manat, and their share in total liabilities amounted to 23,9 percent. Growth rate reached 35 percent compared to the previous year.
Improving of the structure of the deposit portfolio shows increased confidence in the banking system of the country. The share of long-term deposits in total deposit portfolio varies from 60-63 percent, whereas in the first quarter of 2009, their share was 51 percent.
Moreover, the growth dynamics of household deposits was observed in the first quarter. During the first quarter deposits increased by 7 percent, reaching 1941.6 million manat. The proportion of these deposits varied during the quarter, within 78-81 percent of total deposits.
Besides the structure of deposits on terms, its duration also improved. About 33.4 percent of deposits accounted for deposits maturing in one year (compared to 32.3 percent at the beginning of the year).
Interbank liabilities during the quarter increased by 18.9 percent or 322.5 million manat, amounting to 2 billion manat or 1 / 5 of total liabilities April 1.
In the first quarter of 2010 net growth in liabilities drawn from non-residents amounted to 170 million manat or 9.8 percent.
The restoration of resource sources of the banking system has reduced the need for funds of the Central Bank of Azerbaijan. As a result, the proportion of resources drawn from the CBA, declined during the quarter from 15.2 percent to 14.4 percent.
The ratio of liquid assets to total volume of assets confirms the adequacy of risk management of liquidity in the banking system. At the end of the quarter, the share of liquid assets to total assets was 24 percent. But as to deposits during the quarter the amount varied from 59-64 percent. Liquid assets available in the banking system enable timely and fully implement the commitments.
During the reporting period, the central bank continued realization of its restraint and healthy policy of growth. Banks conduct monitoring and evaluate the effectiveness of measures to strengthen risk management systems. Depending on the results, proposals for improvement and adjustment of current and planned activities of banks are prepared.
CBA directs banks to more conservative approaches in the position of credits and deposits while managing liquidity risk.
On June 7, the official exchange rate is 0.8037 manat to $1.